The Financial Markets Authority says it was aware of the Reserve Bank's concerns in relation to NZX-listed insurer CBL Corporation before the company went into trading halt last month.
CBL debuted on the New Zealand sharemarket in October 2015 at $1.73 and its share price rose to more than $3 in a couple of years.
The company was placed on trading halt on February 2 and a few days later announced it was having to strengthen the reserves for its French construction business by $100 million, and had made a $44m write-off, resulting in a likely after tax loss of between $75m to $85m.
CBL talked about a capital raising and said more details would follow. Two days later came revelations that the Reserve Bank — New Zealand's regulator for the insurance industry — had been reviewing the adequacy of its reserves for the French construction business and had imposed a direction as far back as July 2017 on its minimum solvency followed by a further direction in November to consult it on any non-business-as-usual transactions over $5m.
Shareholders were told this was the first time the company could talk about it because of strict confidentiality orders imposed by the Reserve Bank.
A day later, on February 8, the NZX suspended the quotation of CBL Corporation's ordinary shares on concerns about whether shareholders had received full disclosure of what was going on at the firm even though CBL said it was not in breach of disclosure rules.
By mid-February, CBL announced it would exit its French construction insurance business.
A week later the Reserve Bank stepped in applying to the High Court at Auckland to place CBL Insurance, a subsidiary of the corporation, into interim liquidation — a move it says was triggered after the company paid $55m to overseas companies, breaching the central bank's orders.
The parent company then called in voluntary administrators to prevent other regulators from taking action.
"Prior to 2 February 2018, although the FMA was aware of the RBNZ's [Reserve Bank of New Zealand's] concerns, the information was in dispute between CBL and RBNZ. During this period there was insufficient information to be able to contradict CBL's assessment of its financial position," the FMA said.
"The purpose of the RBNZ engagement was to substantiate the information being provided by CBL. The FMA engaged with NZX Regulation, who engaged with CBL during this period and CBL confirmed to NZX Regulation that it was in compliance with its continuous disclosure obligations."
The fact that a listed issuer was engaging with a regulator was not necessarily material information in itself, the FMA said.
"The materiality of the information depends upon the nature and likely outcomes of that engagement," it said.
"On 2 February 2018 we received further information from RBNZ that led us to believe there was a significant risk of a false market in the CBL shares. We passed this information on to NZX Regulation, and following dialogue between NZX Regulation and the company, CBL was put into trading halt."
CBL Corp managing director Peter Harris last week said there was a wider story to be told about how CBL got to where it is and where it might be heading.
"The facts will show some mistakes we have made, and the cause and effect of those, and just where we are and why, along with our plan for dealing with these issues."
Harris has withdrawn as New Zealand's entry to the EY Entrepreneur of the Year global competition.
He was crowned as the country's entrepreneur of the year last October by an independent judging panel and was due to head to Monaco in June to represent New Zealand in the global competition.